Andy was a featured panelist discussing the biotechnology sector on The Watch List with Nicole Petallides.


Biotech in bear markets

It’s an interesting time to look at the biotechnology sector since healthcare and pharmaceuticals tend to hold up relatively well during bear markets and recessions. Investors should note that biotech companies need cash to do the expensive work of making medicines and the cost of capital has increased a lot over the last 12 months. Historically, recessions have brought lower interest rates and that benefits growth companies in biotech, but this time is different. The Fed is not likely to pivot in the immediate term. ·

The year-long down turn has forced publicly traded companies to sell stock at discounted prices to raise cash · Private companies have not been able to execute IPOs and have been forced to return to Venture Capital. There’s a cash crunch until the market turns around. For now, we favor large-cap companies.

Regeneron Pharmaceuticals (REGN)

  • $76.6B market cap
  • Lead asset Eylea looks likely to face generic competition
  • The company hopes to establish itself as a major oncology player – 4 new drugs targeting NSCLC, ovarian, and prostate cancers
  • Stock selling at 17x 2024 EPS of $40.69

What do you think about the biotech sector? A buy or still not attractive?